Will Capital One’s Big Air Miles Bonus Work?

By Quentin Fottrell

Capital One’s offers to match up to one billion air miles to new customers certainly makes a snappy headline, and has caused quite a buzz among air mile aficionados. Capital One Financial Corp. is currently rewarding customers that switch to its Venture Card with up to100,000 air miles (or one billion air miles in total).

The catch: The offer is on a first-come, first-serve basis and will end when the one billion miles have been claimed, or on May 13, whichever comes first. Also, new customers need to spend $1,000 on their credit cards within the first 90 days, but they get 10,000 extra air miles when they spend it.

But there’s also a possible pitfall for Capital One: There’s nothing to stop high-flying customers switching over for their free air miles, and after a few short months switching back to their old cards. The company (of course) feels sure the promotion will inspire loyalty. Otherwise, it wouldn’t have made the offer.

However, Tim Winship, publisher of Frequentflier.com, says frequent fliers could theoretically take the 100,000 air miles, wait three months to spend $1,000, and run. “People most invested in airline programs stand to earn the most from the offer,” he says. “Theoretically, that means they’re the most likely to return to their network of companies.”

The card isn’t cheap, with a variable APR of 11.9% to 19.9% and an annual fee of $59. Capital One has waved the fee for the first year for new customers to sweeten the deal. In its favor: The card offers double miles on every purchase and doesn’t put restrictions on dates or airlines.

Industry experts are divided over whether the interplanetary one billion air mile goal is an advertising gimmick or a realistic cut-off point for the company. Winship says it’s possible: “If I had to put money on it, I’d absolutely say … yes.” Curtis Arnold, founder of CardRatings.com, disagrees: “I think it’s more of a marketing hook.”

Would you take the air miles, wait a respectable amount of time, then run?

About Pay Dirt

Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.